The money market rate decreased marginally last week
as the Overnight rate (OVN) and Open Buy Back rate (OBB) fell to 6.83% and
6.00% respectively. Consequently, the average money market rate decreased by
0.92% to settle at 6.42% due to increase in the system liquidity to close at
cN780bn due to an inflow from OMO T-bills maturities of cN315bn and CBN retail
refund of cN360bn despite an outflow from Wholesale, Invisible & SME FX
auction of $210mn, Retail Auction of cN350bn and CRR of cN2.9bn during the
week.

Despite another round of FX sales in the Wholesale,
Invisibles and SME Market on Monday, we expect rates to decline further on
Monday due to expected inflow from FAAC this week. Barring several OMO auctions
during the week, we expect the rate to close lower for the week.

Instrument

24/08/2018

31/08/2018

Change

OBB

6.75%

6.00%

-0.75%

OVN

7.92%

6.83%

-1.09%

Source:
Anchoria AM Research, FMDQ OTC

Forex: USD/NGN

The CBN Official rate and the rate in the Investors
and Exporters’ FX Window rose by 0.02% and 0.08% to close at N306.15/$ and
N362.35/$ respectively. Naira at the parallel market remained unchanged to
close at N360.00/$ (using the Everdon BDC Rate).

We expect rates in the parallel market to remain
constant as the apex bank continues to supply FX into the market coupled with
its frequent Wholesale and Retail SMIS programme.

24/08/2018

31/08/2018

Change

CBN Official Rate

306.10

306.15

+0.02%

I&E FX Window

362.35

362.64

+0.08%

Everdon Rate

360.00

360.00

+0.00%

Source:
Anchoria AM Research, FMDQ OTC

Commodities

The Brent Crude oil and WTI crude oil rose
by 2.11% and 1.57% to close at $77.42 per barrel and $69.80 per barrel
respectively due to anticipation of the impact of the U.S. sanctions on Iran.

The exports of crude oil from Iran have
already been declining and the market reflect concerned regarding potential
supply deficit starting from November when the U.S. sanctions targeting Iran
come into effect.

U.S. Imports of oil maintained the same
level in the week ending Aug. 24 compared with the reported level of previous
week. Meanwhile, U.S. net imports of oil decreased by 657,000 barrels per day
during the week.

Fixed Income

Bond

The Bond market traded on a bearish note last week
with sell offs in most of the tenors. Sell offs was more pronounced on the JAN
2026 bonds (+38bps). The 2027 and 2036 bonds were the most traded bonds during
the week with N95.37bn and N105.80bn value traded respectively. Average yield
rose by 30bps to close the week at 14.85%. This can be attributed to the
following a) expected increase in FGN borrowing; b) weak investors’ sentiment
across Emerging Markets.

Secondary Market

Source:
Anchoria AM Research, FMDQ OTC

Treasury Bills

Despite a buoyant system liquidity during the week,
the treasury bills market traded on a bearish note following the result of the
primary market auction. Consequently, the average yield rose by 5bps to close
the week at 12.20%. Market activities was relatively active as value of
transactions rose to N955.84bn from N413.61bn in the previous week.